The Auditors' Report on the Entity's Financial Statements Included Language

question 125

Multiple Choice

The auditors' report on the entity's financial statements included language disclosing a difference of opinion between the auditors and the entity for which the auditors believed an adjustment to the financial statements should be made. The Opinion Section of the auditors' report should express a(n)

• A)unmodified opinion.
• B)qualified opinion citing a departure from generally accepted accounting principles.
• C)qualified opinion citing a scope limitation and lack of specific evidence.
• D)disclaimer of opinion.

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Definitions:

Traditional Format Income Statement

A financial statement format that separates operating activities from non-operating activities to reveal gross profit, operating income, and net income.

Contribution Format Income Statement

An income statement format that separates variable and fixed costs, making it easier to see the contribution margin.

Contribution Margin

The revenue remaining after deducting variable costs, which contributes to covering fixed costs and generating profit.

Direct Manufacturing Cost

Expenses directly associated with the production of goods, including direct materials and direct labor costs.